Gold Demand Steady Despite Price Fluctuations

Falling prices have not made gold lose any glitter as demand for the precious metal remains constant, say industry experts.

New research shows the demand for gold matches the average five-year trend despite massive peaks and troughs in prices over the period.

The World Gold Council says demand for the metal hit 1,074 tonnes in the first three months of 2014 – matching the same period a year earlier.

The biggest demand for gold is for jewellery, with a 10% increase in China, which is the world’s largest market for gold, says the council’s latest quarterly gold trends report.

Total demand for jewellery was 571 tonnes in the first quarter of 2014 – 3% up on the same period in 2013.

Import tariffs

Central banks increasing stockpiles bought 122 tonnes of gold, which was 6% down on the first three months of last year but the 13th quarter in a row with central banks as net gold purchasers rather than sellers.

Investment demand was slightly down at 282 tonnes in the quarter, against 288 tonnes in the same quarter last year.

The call for gold bars and coins dropped 39% to283 tonnes. The downward trend was driven by a massive 54% fall in demand in India following tariffs and duties imposed by the government on gold imports.

The Indian government was concerned that the rupee was being destabilised by currency flowing out of the country for conversion into gold.

The other major change in comparison figures between Q1 2014 and Q1 2013 was with exchange traded funds (ETF). Last year, the quarter saw a massive fall of 177 tonnes, whereas this year, the figure was a negligible 0.2 tonnes.

Jewellery in demand

Converting the supply figures into monetary terms, gold demand slipped £26 billion or 21% in the first three months of 2014 compared with the same period in 2013 due to a corresponding percentage fall in the price of an ounce of gold to an average £766 from £969.

Marcus Grubb, managing director for investment strategy at the World Gold Council, said: “2013 was an impressive year for gold. Despite falling prices that have recently rallied, the first three months of 2014 signals to us that demand is holding steady.

“The market has not radically changed despite the rise and fall of prices. Jewellery demand in Asia is holding the market up and shows that investors and consumers want to buy gold and that the metal is precious as an asset.”

Below is a list of some related articles, guides and insights that you may find of interest.

Questions or Comments?

We love to get feedback from our readers. So, after reading this article, if you have any questions or want to make comments, send us a message on this site or our social media?

Don’t forget that you can also request the guides sent directly to your email inbox.